Manchester's tax cap tightens belt just a notch

By TED SIEFERNew Hampshire Union LeaderJanuary 23. 2014 10:25PMMANCHESTER — The city and school budgets for the next fiscal year can increase by a maximum of 2.13 percent.

The city’s finance director this week announced the official tax cap number, which is based on the three-year average change in the Consumer Price Index. Earlier this month, the U.S. Bureau of Labor Statistics released its CPI statistics for 2013.

The cap is slightly more restrictive than last year’s rate of 2.17 percent.

Last year, Mayor Ted Gatsas proposed budgets of $138 million for the city and $155.7 million for the school district. Using these figures as a rough guide, the budgets for the next fiscal year, which begins July 1, cannot increase by more than $2.9 million for the city and $3.3 million for the schools.

Gatsas has said that the next budget is extremely challenging due to built-in cost drivers, such as increases in health insurance and city and state retirement costs. In addition, he has told his department heads to propose budgets that are 1 percent higher than last year.

Among the proposals city officials are considering is a “pay-as-you-throw” trash collection program that could, according to one estimate, save the city $3.5 million.

One positive fiscal development is that several departments have been reporting surpluses in recent months; vehicle registration fees continue to exceed projections. At the same time, the welfare and fire departments are projecting deficits that could top $400,000.

This is the third budget that has been constrained by the tax cap, which was approved by voters. The cap applies to both the increase in the size of the city budgets and the increase in the property tax rate; however the property rate cannot be established unilaterally by the city. State revenue officials determine the rate in the fall, months after the start of the new fiscal year. It is based on a number of factors the city can’t control.

“I don’t envy the aldermen at all this year,” said Robert Gagne, chairman of the city’s Board of Assessors.

Finance Director Bill Sanders did not return a call for comment on Thursday. tsiefer@unionleader.com